NEW YORK, Jan 28, 2026, 15:16 (EST)
- The Federal Reserve kept its benchmark rate at 3.50%-3.75% and flagged “somewhat elevated” inflation.
- The S&P 500 briefly topped 7,000, then eased as investors weighed the Fed’s next move and Big Tech earnings.
- The dollar rebounded after a sharp slide; gold pushed above $5,300 an ounce.
The Federal Reserve held interest rates steady on Wednesday and said inflation remained “somewhat elevated,” keeping investors guessing on when — or if — the next rate cut comes this spring. 1
Markets have been trading like a coiled spring. Stocks are near records, the U.S. dollar has been whipping around, and traders are braced for fresh signals from policymakers in a week packed with heavyweight earnings. 2
The Fed’s rate-setting Federal Open Market Committee voted 10-2 to hold the benchmark rate range at 3.50%-3.75%, with Governors Christopher Waller and Stephen Miran dissenting in favor of a quarter-point cut. The decision lands as President Donald Trump keeps pressing for lower borrowing costs and has said he will announce his pick to replace Chair Jerome Powell, whose term ends in May. 3
The S&P 500 briefly crossed 7,000 for the first time earlier in the session, lifted by optimism that artificial intelligence — AI — will drive a new profit cycle. “If AI spending translates into revenues, this rally can continue,” Jeff Leschen, head of investment research at Bramshill Investments, said. 4
Outside the United States, the mood was less giddy. London’s FTSE 100 fell 0.5% as investors rotated toward U.S. technology shares ahead of earnings, Axel Rudolph, senior financial analyst at IG, said, adding that the shift helped push the S&P 500 through the 7,000 mark. 5
Not everyone is buying the smooth, straight-line AI story. Cisco Systems CEO Chuck Robbins said the current market “is probably” a bubble, arguing that “the winners emerge, and there’s carnage along the way.” 6
In currencies, the dollar steadied after the Fed offered little guidance on timing for further cuts and Treasury Secretary Scott Bessent reaffirmed a strong-dollar policy. “The Fed did nothing and did it with conviction,” Karl Schamotta, chief market strategist at Corpay, said, while Kyle Chapman at Ballinger Group said he saw “no reason to cut until at least the summer.” 7
The rebound followed a bruising Tuesday, when the dollar slid after Trump dismissed concern about the currency’s drop. “The president had been largely indifferent to the dollar’s decline, emboldening some to put on bearish bets,” Steven Englander, head of G10 FX research at Standard Chartered in New York, said. 8
Gold, which offers no yield but is often treated as a crisis hedge, topped $5,300 an ounce and set a record high of $5,311.31. “The rally in the precious metals have kind of taken on a life of their own,” Peter Grant, vice president and senior metals strategist at Zaner Metals, said, warning the market looked overbought even as dip-buying stayed strong. 9
There is a messier downside scenario. A sharp, policy-driven dollar slide could rattle huge overseas holdings of U.S. stocks and bonds and complicate the Fed’s inflation fight by lifting import prices, economist Tim Duy at SGH Macro Advisors wrote, calling attempts to push the dollar down a “double-edged” move for markets. 10
For now, traders are still leaning toward a first rate cut around the Fed’s June meeting, while results from Meta, Microsoft and Tesla after the bell stand to decide whether the AI rally stays on rails — or hits one of those potholes markets pretend aren’t there until they are.
